Sterling takes a pounding as UK exits EU

Even before the Brexit vote confirmed that the UK would leave the European Union (EU), many money changers in Singapore had stopped selling British pounds in anticipation of the sterling taking a pounding against other currencies

And so it was, with the British pound later plunging to a 30-year low against the greenback.

In Singapore, the sterling, which opened trading at S$1.99 yesterday morning, had dropped to an all-day low of S$1.80 by around 12.30pm.

By then, several people hoping to cash in on the sliding pound were disappointed after being turned away by money changers who either refused to sell or claimed they had no more stock.

Mr Mohamed Sultan, 57, who owns Triple Star Exchange in Holland Village was one of those who refused to sell.

He had bought S$20,000 worth of pounds, at S$1.95 each, on Wednesday in anticipation of the UK voters rejecting Brexit, which would have boosted the value of sterling.

But with the vote going the other way, Mr Sultan has decided to stop trading the pound until it climbs back up to at least S$1.90.

He told The New Paper: "I'll make a loss if I sell my stock of the pound now. Customers have been asking for the rate, but I told them that I'm not trading right now."

Other money changers said they had run out of the currency after early birds snapped up their stock.

"A lot of people want to change money, but there's no stock," said Mr Mohamed Rafeeq, the owner of Clifford Gems & Money Exchange.

"The rate has been very volatile, even before the results came out. Most of the money changers are making a loss."

LONG QUEUES

When TNP visited The Arcade in Raffles Place, six of the 11 money changers there said they were out of stock.

Long queues formed at those who were still selling the sterling, with some customers waiting for almost two hours for their turn.

A 29-year-old Singaporean, who wanted to be known only as Ms Viknes, was Rasha Traders' biggest customer - she bought S$16,000 worth of pounds at S$1.91 each.

Ms Viknes, who is pursuing a Master's in Law at the London School of Economics, told TNP: "I've been observing the polls and waiting for a few months to change my money.

"But the polls, which mostly predicted that the UK would remain (in the EU), weren't that accurate. Maybe it's also a bit of luck."

Currency experts are not ruling out further plunges in the sterling, with OCBC Bank currency economist Emmanuel Ng predicting it to go as low as S$1.30.

"In the foreign exchange space, we expect global central banks to remain on hand to smooth volatility and potentially provide surplus liquidity if necessary," he said.

PM Lee: Vote is 'a turning point'

Prime Minister Lee Hsien Loong said the UK's vote yesterday to leave the European Union (EU) is "a turning point" which "reflects the anxiety of the British population over immigration, their resentment at having to negotiate with and accommodate European partners, and their desire to assert British identity and sovereignty".

In a Facebook post yesterday afternoon, Mr Lee said other developed countries also face similar challenges as Britain.

"We all live in a globalised, interdependent world.

"The desire to disengage, to be less constrained by one's partners, to be free to do things entirely as one chooses, is entirely understandable.

"And yet in reality for many countries disengaging and turning inwards will likely lead to less security, less prosperity, and a dimmer future."

He added that the next few years will be uncertain for Britain and Europe: "Leaving the EU is as complicated as joining it. What new arrangements will be made?

"Will this hurt investor confidence more broadly, and the global economy? How will Britain's leaving affect the rest of the EU?

"How will this affect us, living in Asia but part of the same globalised world?

"It is too early to tell, but we need to watch developments carefully. Nobody can foresee all the consequences of the Brexit."

Noting the British voters' decision, he wished Britain and its Prime Minister, Mr David Cameron, who has just resigned, well.

Mr Lee said Singapore will continue to cultivate its ties with Britain, which he described as a "long-standing friend and partner".

"We hope in time the uncertainty will diminish, and we will make the best of the new reality."